SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File No. 0-17808
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2940131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
225 Franklin Street, 25th FL. Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 261-9000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
No voting stock is held by nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
ITEM 1. BUSINESS.
New England Pension Properties V; A Real Estate Limited Partnership (the
"Partnership") was organized under the Uniform Limited Partnership Act of the
Commonwealth of Massachusetts on October 23, 1986, to invest primarily in
to-be-developed, newly-constructed and existing income-producing real
properties.
The Partnership was initially capitalized with contributions of $2,000 in
the aggregate from Fifth Copley Corp. (the "Managing General Partner") and
ECOP Associates Limited Partnership (the "Associate General Partner")
(collectively, the "General Partners") and $10,000 from Copley Real Estate
Advisors, Inc. (the "Initial Limited Partner"). The Partnership filed a
Registration Statement on Form S-11 (the "Registration Statement") with the
Securities and Exchange Commission on November 12, 1986, with respect to a
public offering of 60,000 units of limited partnership interest at a purchase
price of $1,000 per unit (the "Units") with an option to sell up to an
additional 60,000 Units (an aggregate of $120,000,000). The Registration
Statement was declared effective on January 9, 1987.
The first sale of Units occurred on July 23, 1987, at which time the
Initial Limited Partner withdrew its contribution from the Partnership.
Investors were admitted to the Partnership thereafter at monthly closings;
the offering terminated and the last group of subscription agreements was
accepted by the Partnership on December 31, 1987. As of January 31, 1988, a
total of 83,291 Units had been sold, a total of 12,900 investors had been
admitted as limited partners (the "Limited Partners") and a total of
$82,761,530 had been contributed to the capital of the Partnership. The
remaining 36,709 Units were de-registered on March 17, 1988.
The Partnership makes available 2% of Cash Flow, as defined in the
Partnership's Amended and Restated Agreement of Limited Partnership dated
July 23, 1987, for the purpose of repurchasing Units. See Note 1 of the
Financial Statements in Item 8 hereof.
Through December 31, 1996, the Partnership had invested in nine real
property investments; two of these investments were sold in 1994. Sales
proceeds were distributed in the amount of $48 per Unit in 1994 and $28 per
Unit in 1995, after the Partnership made certain strategic decisions on
projects yet to be developed. The Partnership has no current plan to
renovate, improve or further develop any of its real property other than as
described in E. below. In the opinion of the Managing General Partner, the
properties are adequately covered by insurance.
The partnership has no employees. Services are performed for the
Partnership by the Managing General Partner and affiliates of the Managing
General Partner.
A. Land in Germantown, Maryland ("Waters Landing II").
On May 26, 1987, the Partnership acquired a 60% interest in a joint
venture with Waters Landing Two-Oxford Limited Partnership ("Oxford"). As of
December 31, 1996, the Partnership had contributed $1,403,112 to the capital
of the joint venture out of a maximum commitment of $4,682,400. The joint
venture agreement entitles the Partnership to receive a monthly preferred
return on its invested capital at the rate of 10.5% per annum. Prior to
December 1, 1994, such monthly preferred return was permitted to accrue to
the extent that the joint venture did not have sufficient cash to pay it. The
joint venture agreement also entitled the Partnership to receive 60% of all
remaining cash flow from operations and 60% of net sale and refinancing
proceeds following the return of the Partnership's equity. The Partnership
also committed to make a loan of up to $3,121,600 to Oxford for investment in
the venture of which $935,408 had been funded as of December 31, 1996.
Interest only on the loan was payable monthly at the rate of 10.5% per annum.
The loan will be due upon the sale of the joint venture's assets or the sale
of Oxford's interest in the joint venture. Oxford must apply any cash flow
received from operations of the joint venture to interest payments on the
loan and must apply proceeds of financings or sales received from the joint
venture to payments of the interest on and principal of the loan. The loan is
secured by Oxford's
interest in the joint venture. Effective April 1, 1996, the joint venture
partner's ownership interest was transferred and assigned to the Partnership
and an affiliate.
The joint venture owns approximately 8.5 acres of land in Germantown,
Maryland and originally intended to construct a 144-unit apartment complex.
Development had been postponed due to the excess supply of apartment units in
the Germantown area. During 1995, after a number of feasibility studies of
alternative development proposals for the site, it was determined development
would not yield a sufficient return to justify the investment risk.
Accordingly, the Partnership intends to sell the land parcel when market
conditions improve.
B. Warehouse Building in Fontana, California ("Dahlia").
On September 21, 1987, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of Investment Building Group. As of December
31, 1996, the Partnership had contributed $7,081,593 to the capital of the
joint venture out of a maximum commitment of $7,250,000. The joint venture
agreement entitles the Partnership to receive a monthly preferred return on
its invested capital at the rate of 10% per annum. The joint venture
agreement also entitles the Partnership to receive 60% of the remaining cash
flow and 60% of sale and refinancing proceeds following the return of the
Partnership's equity. On September 1, 1995, the joint venture was converted
into a limited partnership with the Partnership as the general partner and
the affiliate of Investment Building Group as the limited partner.
The limited partnership owns approximately 12.9 acres of land in Fontana,
California and has completed construction thereon of a one-story warehouse
building containing approximately 278,220 square feet of space. As of
December 31, 1996, the building was 100% leased.
C. Office/Warehouse Buildings in Phoenix, Arizona ("University Business
Park").
On September 30, 1987, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of The Hewson Company. The Partnership
contributed $7,976,784 to the capital of the joint venture out of a maximum
commitment of $9,450,000. The joint venture agreement entitled the
Partnership to receive a monthly preferred return on its invested capital at
the rate of 10% per annum. The joint venture agreement also entitled the
Partnership to receive 60% of the remaining cash flow and 60% of sale and
refinancing proceeds following return of the Partnership's equity. Effective
January 1, 1996, the joint venture was dissolved and ownership of the joint
venture assets was assigned to the Partnership.
The Partnership owns approximately 8.5 acres of land in Phoenix, Arizona
and has completed construction thereon of five warehouse buildings containing
approximately 109,930 square feet of space. As of December 31, 1996, the
buildings were 100% leased.
On January 27, 1997, a letter of intent to purchase this property was
received for a sales price which exceeded carrying value at December 31, 1996.
D. Office/Research and Development Buildings in Columbia, Maryland
("Columbia Gateway Corporate Park").
On December 21, 1987, the Partnership acquired a 33% interest in a joint
venture formed with New England Life Pension Properties IV; A Real Estate
Limited Partnership, an affiliate of the Partnership (the "Affiliate"), which
had a 17% interest, and M.O.R. Gateway 51 Associates Limited Partnership.
As of April 20, 1989, the joint venture agreement was amended and
restated to reflect a decrease in the Partnership's interest in the joint
venture to 15.25% and an increase in the Affiliate's interest in the joint
venture to 34.75%. In addition, the amended and restated joint venture
agreement increased the Affiliate's maximum obligation to contribute capital
to the joint venture and reallocated the capital contributed to the joint
venture by the Partnership and the Affiliate. As of December 31, 1996, the
Partnership had contributed $6,181,690 to the capital of the joint venture
out of a maximum commitment of $6,402,000.
The joint venture agreement entitles the Partnership and the Affiliate to
receive a preferred return on their respective invested capital at the rate
of 10.5% per annum. Such preferred return will be payable currently until the
Partnership and the Affiliate have received an aggregate of $8,865,000;
thereafter, if sufficient cash flow is not available therefor, the preferred
return will accrue and bear interest at the rate of 10.5% per annum,
compounded monthly. The joint venture agreement also entitles the Partnership
to receive 15.25% of cash flow following payment of the preferred return and
15.25% of the net proceeds of sales and refinancings following return of the
Partnership's and the Affiliate's equity.
The joint venture owns approximately 20.85 acres of land in the Columbia
Gateway Corporate Park in Columbia, Maryland. The intended development plan
for this land was for a two stage development of seven office and research
and development buildings. The first phase of this development was completed
in 1992 and included the construction of four, one-story office and research
and development buildings containing 142,545 square feet. The second phase of
this development commenced in the spring of 1994 in which two buildings
totaling 46,000 square feet were constructed and leased to a single tenant
for a lease term of ten years. As of December 31, 1996 the property was 94%
occupied.
E. Industrial Building in Brea, California ("Puente Street").
On April 28, 1988, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of The Muller Company. In April, 1990, the
Partnership increased its commitment to the joint venture by $625,000 to
$13,725,000 of which $13,475,000 had been contributed as of June 1, 1991. The
joint venture agreement entitled the Partnership to receive a monthly
preferred return on its invested capital at the rate of 10.5% per annum. The
joint venture agreement also entitled the Partnership to receive 60% of the
remaining cash flow and 60% of sale and refinancing proceeds following the
return of the Partnership's equity. As of June 1, 1991, because of the
developer partner's inability to fund its share of capital contributions, the
Partnership assumed 100% ownership of the joint venture's assets.
The Partnership owns approximately 16.75 acres of land in Brea,
California and has completed renovation of an existing building thereon
containing 181,200 square feet. Construction of an approximately 37,320
square foot addition was completed during the first quarter of 1989.
Construction of a parking lot and storage area on the remaining vacant land
was completed during 1990. As of December 31, 1996, the building was 100%
leased to two tenants.
On December 8, 1995 the Partnership was named as a defendant in a
complaint filed in the Superior Court of the State of California for the
County of Orange by an existing tenant, Bridgeport Management Services, Inc.
alleging breach of lease. On January 17, 1996 the Partnership filed an answer
denying the allegations presented by the plaintiff. It is expected that this
matter will be settled with no significant effect on the Partnership's
financial position.
The Partnership continues to evaluate the alternatives of developing
additional space on the 2.8 acres of land currently improved with a parking
lot, or selling the land.
F. Shopping Center in Salinas, California ("Santa Rita Plaza").
On February 1, 1989, the Partnership acquired a 60% interest in a joint
venture formed with Rodde McNellis/Salinas. On July 20, 1990, the Partnership
committed to increase its maximum contribution from $9,500,000 to
$11,350,000, of which $6,500,000 is characterized as Senior Capital and
$4,850,000 is characterized as Junior Capital. As of December 31, 1996, the
Partnership had contributed $11,063,340 to the capital of the joint venture.
The joint venture agreement entitles the Partnership to receive a monthly
preferred return on its Senior Capital at the rate of 10.5% per annum during
months 1-24 of the joint venture's operations and a monthly preferred return
to reduce its outstanding Senior Capital, together with a return at the rate
of 10.5% per annum, based on a 27-year amortization schedule, during months
25-120 of the joint venture's operations. The entire outstanding Senior
Capital is due and payable ten years after the date of the Partnership's
first investment of Senior Capital. The joint venture agreement also entitles
the Partnership to receive a priority return payment on its Junior Capital at
the rate of 10.5% per
annum. Such junior priority return payment will accrue and bear interest at
the rate of 10.5% per annum, if sufficient cash is not available therefor. At
such time as the aggregate of accrued junior priority return payments total
$1,000,000, all junior priority return payments and the return on the accrued
junior priority return payments will thereafter be paid currently; provided,
however, that the $1,000,000 threshold will be increased by each dollar of
Junior Capital which the Partnership elects not to contribute to fund its
return. The Junior Capital will be due and payable after the fifteenth year
of the joint venture's operations. On August 1, 1995 the joint venture was
converted into a California limited partnership with the Partnership as the
general partner with a 63% ownership interest and an affiliate of
Rodde/McNellis Salinas as the limited partner with a 37% interest. The joint
venture agreement also entitles the Partnership to receive 63% of cash flow
remaining after payment of the preferred return and 63% of sale and
refinancing proceeds following the return of the Partnership's equity.
The limited partnership has a leasehold interest in approximately 10.56
acres of land in Salinas, California (the "Land") and has completed
construction thereon of five one-story retail buildings containing a total of
approximately 125,247 square feet. The ground lease has a term of 75 years
with two options to extend, for ten years each. Under the ground lease, fixed
rent of $390,000 per annum is payable. A percentage rent equal to 11.55% of
rents in excess of $1,400,000 received by the ground lessee from subtenants,
excluding expense reimbursements, is also payable. As of December 31, 1996,
the buildings were 98% leased.
On August 1, 1995 the Partnership made a $1,750,000 loan to Nielsen
Properties, Ltd., which is the ground lessor, for a term of 15 years. The
loan earns interest at the rate of 8.75% per annum and the Partnership can
require full payment of the note on or after August 1, 2000. The note is
secured by a deed of trust on the Land. In conjunction with this loan,
Nielsen Properties, Inc. repaid the limited partnership $1,299,052,
representing full payment of two outstanding notes receivable.
G. Office/Retail/Industrial Buildings in Las Vegas, Nevada ("Palms
Business Center III and IV").
On March 7, 1988, the Partnership acquired a 60% interest in a joint
venture formed with an affiliate of B.H. Miller Companies. As of January 1,
1995, the Partnership had contributed $11,589,888 to the capital of the joint
venture out of a maximum commitment of $11,700,000. The joint venture
agreement entitled the Partnership to receive a monthly preferred return at
the rate of 11% per annum on the daily balance of its invested capital during
each month, of which 9.5% per annum was to be paid currently and up to 1.5%
per annum was to be deferred if sufficient cash was not available therefor.
All invested capital, monthly payments of preferred return and deferred
monthly payments of preferred return were due and payable at the end of the
tenth year of the joint venture's operations. The joint venture agreement
also entitled the Partnership to receive 60% of net cash flow and 60% of sale
and refinancing proceeds following the return of the Partnership's equity
capital. Effective January 1, 1995, the joint venture partner's ownership
interest was transferred and assigned to the Partnership.
The Partnership owns approximately 11.75 acres of land in Las Vegas,
Nevada and has completed construction thereon of twelve single-story
office/industrial buildings and one single-story retail building containing a
total of approximately 173,574 square feet. As of December 31, 1996, the
buildings were 98% leased. In October 1994, the Clark County Department of
Public Works paid the Partnership $18,600 to acquire a necessary strip of
land to widen the road that fronts a portion of the property, in conjunction
with planned road improvements in the area.
ITEM 2. PROPERTIES
The following table sets forth the annual realty taxes for the
Partnership's properties and information regarding tenants who occupy 10% or
more of gross leasable area (GLA) in the Partnership's properties.
ESTIMATED ANNUAL
1997 NUMBER OF CONTRACT LINE OF
ANNUAL TENANTS WITH SQUARE FEET RENT BUSINESS
REALTY 10% OR MORE NAME(S) OF OF EACH PER SQUARE LEASE RENEWAL OF PRINCIPAL
PROPERTY TAXES OF GLA TENANT(S) TENANT FOOT EXPIRATION OPTIONS TENANTS
- ------------ ---------- --------------- ------------ ----------- ----------- ----------- ------------ ------------
Office/ R&D
Bldgs in
Columbia,
MD $ 210,124 4 Wiltel 23,760 $8.74 3/1997 One for 5 Years Telecommunications
Columbia
National 45,951 $8.95 8/2004 Two for 5 Years Home Mortgages
EVI, Inc. 38,225 $9.00 2/2006 One for 5 Years Environmental
/Testing
Coram 25,932 $8.87 1/1997 One for 5 Years Medical Services
Land in
Germantown,
MD $ 18,309 N/A N/A N/A N/A N/A N/A N/A
Warehouse
Bldg. in
Fontana,
CA $ 85,371 3 M.W. Kasch 172,972 $3.21 5/2003 One for 5 Years Distribution
Aromatics
Industries 84,660 $2.64 5/1998 None Distribution
Building
Materials
Distributor 20,888 $3.56 12/1999 None Distribution
Office/
Warehouse
Buildings
in
Phoenix,
AZ $ 170,000 2 EMCON
Southwest 11,303 $7.44 11/2000 One for 5 Years Telecommunications
MKS Instuments 15,457 $7.44 7/2000 None Medical Supplies
Industrial
Bldg. in
Brea, CA $ 96,234 2 20th Century
Plastics 152,576 $3.03 3/2004 Two for 5 Years Plastics Manuf./
Assembler
Bridgeport
Management 65,944 $3.36 4/1999 None Rec. Vehicle
Storage/Svc
Shopping Ctr
in Salinas,
CA $ 126,480 2 Food Maxx 51,008 $7.32 8/2010 Three for 5 Supermarket
Years
Ross Dress
for Less 17,068 $11.04 1/2001 Three for 5 Apparel Retailer
Years
Office/
Retail/
Industrial
Bldgs in
Las
Vegas, NV $ 87,747 2 Hospitality
Trade Mart 20,531 $6.60 12/2000 N/A Convention Planners
Blublocker Corp. 19,133 $6.11 11/2000 N/A Distribution &
Service
The following table sets forth for each of the last five years the gross
leasable area, occupancy rates, rental revenue, and net effective rent for
the Partnership's properties:
NET
RENTAL EFFECTIVE
GROSS LEASABLE YEAR-END REVENUE RENT
PROPERTY AREA OCCUPANCY RECOGNIZED ($/SF/YR)*
- ------------------------------------------------- ----------------- ----------- ------------- ------------
Office/ R&D Buildings in Columbia, MD
1992 142,545 71% $1,225,076 $10.84
1993 142,545 73% $1,334,767 $13.01
1994 188,649 92% $1,496,175 $9.61
1995 188,649 92% $1,870,329 $10.78
1996 188,649 94% $1,959,621 $11.23
Land in Germantown, MD
1992 N/A N/A N/A N/A
1993 N/A N/A N/A N/A
1994 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
1996 N/A N/A N/A N/A
Warehouse Building in Fontana, CA
1992 278,220 22% $400,496 $6.66
1993 278,220 89% $1,026,506 $4.59
1994 278,220 100% $990,796 $3.77
1995 278,220 100% $1,001,121 $3.60
1996 278,220 100% $1,019,558 $3.66
Office/Warehouse Buildings in Phoenix, AZ
1992 109,930 82% $586,336 $6.56
1993 109,930 80% $797,135 $8.90
1994 109,930 89% $799,675 $8.61
1995 109,930 98% $897,490 $8.40
1996 109,930 100% $1,146,199 $10.48
NET
RENTAL EFFECTIVE
GROSS LEASABLE YEAR-END REVENUE RENT
PROPERTY AREA OCCUPANCY RECOGNIZED ($/SF/YR)*
- ------------------------------------------------- ----------------- ----------- ------------- ------------
Industrial Building in Brea, CA
1992 218,520 0% $790,986 $0.00
1993 218,520 70% $161,378 $4.25
1994 218,520 100% $882,870 $4.75
1995 218,520 100% $949,389 $4.34
1996 218,520 100% $930,938 $4.26
Shopping Center in Salinas, CA
1992 125,247 89% $1,748,287 $15.47
1993 125,247 92% $1,759,243 $10.72
1994 125,247 90% $1,874,676 $16.45
1995 125,247 91% $1,657,425 $14.31
1996 125,247 98% $1,718,737 $14.56
Office/Retail/Industrial Buildings in Las Vegas, NV
1992 173,469 76% $654,064 $5.89
1993 173,469 98% $1,199,317 $7.13
1994 173,574 92% $1,453,205 $8.81
1995 173,574 95% $1,395,445 $8.35
1996 173,574 98% $1,654,465 $9.70
Note: N/A for commercial properties indicates property was not constructed
as of this date.
* Net Effective Rent calculation is based on average occupancy during
the respective years.
Following is a schedule of lease expirations for each of the next ten
years for the Partnership's properties based on the annual contract rent in
effect at December 31, 1996:
TENANT AGING REPORT
------------------------------------------------------------
TOTAL PERCENTAGE OF
# OF LEASE TOTAL ANNUAL CONTRACT GROSS ANNUAL
PROPERTY EXPIRATIONS SQUARE FEET RENT RENTAL*
- -------- ----------- ------------- --------------- --------------
Office/ R&D Buildings in Columbia, MD
1997 3 53,008 $466,595 29%
1998 1 8,781 $93,077 6%
1999 2 32,570 $270,257 17%
2000 0 0 $0 0%
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 1 45,951 $411,261 26%
2005 0 0 $0 0%
2006 1 38,225 $344,025 22%
Land in Germantown, MD
1997 N/A N/A N/A N/A
1998 N/A N/A N/A N/A
1999 N/A N/A N/A N/A
2000 N/A N/A N/A N/A
2001 N/A N/A N/A N/A
2002 N/A N/A N/A N/A
2003 N/A N/A N/A N/A
2004 N/A N/A N/A N/A
2005 N/A N/A N/A N/A
2006 N/A N/A N/A N/A
Warehouse Building in Fontana, CA
1997 0 0 $0 0%
1998 1 84,660 $223,200 26%
1999 1 20,888 $74,361 9%
2000 0 0 $0 0%
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 1 172,972 $554,728 65%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
TENANT AGING REPORT
------------------------------------------------------------
TOTAL PERCENTAGE OF
# OF LEASE TOTAL ANNUAL CONTRACT GROSS ANNUAL
PROPERTY EXPIRATIONS SQUARE FEET RENT RENTAL*
- -------- ----------- ------------- --------------- --------------
Office/Warehouse Buildings in Phoenix, AZ
1997 8 26,896 $174,648 21%
1998 6 23,001 $193,056 24%
1999 1 5,881 $58,632 7%
2000 4 44,138 $350,796 43%
2001 1 4,676 $39,276 5%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
Industrial Building in Brea, CA
1997 0 0 $0 0%
1998 0 0 $0 0%
1999 1 65,944 $221,572 32%
2000 0 0 $0 0%
2001 0 0 $0 0%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 1 152,576 $462,305 68%
2005 0 0 $0 0%
2006 0 0 $0 0%
Shopping Center in Salinas, CA (1)
1997 5 7,920 $109,092 7%
1998 5 10,258 $171,888 12%
1999 3 2,900 $46,548 3%
2000 6 17,313 $340,920 23%
2001 6 32,698 $449,796 30%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
Office/Retail/Industrial Buildings in Las Vegas, NV
1997 2 16,043 $89,076 6%
1998 7 47,105 $520,428 36%
1999 2 18,043 $215,820 15%
2000 5 59,806 $402,024 28%
2001 3 28,176 $216,480 15%
2002 0 0 $0 0%
2003 0 0 $0 0%
2004 0 0 $0 0%
2005 0 0 $0 0%
2006 0 0 $0 0%
* Does not include expenses paid by tenants.
Note: N/A denotes that the disclosure is not applicable based on the nature of
the property.
(1) Remaining leases expire beyond 2006.
The following table sets forth for each of the Partnership's properties
the: (i) federal tax basis, (ii) rate of depreciation, (iii) method of
depreciation, (iv) life claimed, and (v) accumulated depreciation, with
respect to each property or component thereof for purposes of depreciation:
RATE OF LIFE ACCUMULATED
ENTITY / PROPERTY TAX BASIS DEPRECIATION METHOD IN YEARS DEPRECIATION
- --------------------------------------- ------------------- ------------ --------- ----------- ------------
Office/Research and Development
Buildings,
Columbia, MD
- -------------------------------
Land Improvements...................... $94,022 N/A 150% DB 15 $ 28,050
Land Improvements...................... 3,326,314 2.56% SL 39 33,552
Building & Improvements................ 7,829,962 3.18% SL 31.5 1,616,400
---------- ---------
Total Depreciable Assets............... 11,250,298 1,678,002
Office/Warehouse Buildings, Phoenix, AZ
- ---------------------------------------
Building & Improvements................ 4,325,469 3.18% SL 31.5 1,005,127
Building & Improvements................ 461,258 2.56% SL 39 21,499
--------- ---------
Total Depreciable Assets............... 4,786,727 1,026,626
Warehouse Building, Fontana, CA
- -------------------------------
Building & Improvements................ 5,135,156 2.50% SL 40 845,956
--------- ---------
Total Depreciable Assets............... 5,135,156 845,956
Industrial Building, Brea, CA
- -----------------------------
Building & Improvements................ 7,976,123 3.18% SL 31.5 2,061,708
Building Improvements.................. 771,373 2.56% SL 39 58,026
--------- ---------
Total Depreciable Assets............... 8,747,496 2,119,734
Office/Industrial and Commercial
- --------------------------------
Buildings, Las Vegas, NV
Building & Improvements................ 8,637,020 3.18% SL 31.5 1,643,236
Tenant Improvements.................... 318,324 2.56% SL 39 32,084
--------- ---------
Total Depreciable Assets............... 8,955,344 1,675,320
Land, Germantown, MD
- --------------------
No Depreciable Property................ 0 0.00% 0
--- ---
Total Depreciable Assets............... 0 0
Shopping Center, Salinas, CA
- ----------------------------
Building & Improvements................ 305,868 2.5% SL 40 5,054
Building & Improvements................ 8,989,174 3.18% SL 31.5 1,716,079
--------- ----------
Total Depreciable Assets............... 9,295,042 1,721,133
Total Depreciable Assets...............$48,170,063 $ 9,066,771
----------- ------------
----------- ------------
SL= Straight Line
DB= Declining Balance
Following is information regarding the competitive market conditions for
each of the Partnership's properties. This information has been gathered from
sources deemed reliable. However, the Partnership has not independently
verified the information and, as such, cannot guarantee its accuracy or
completeness.
INDUSTRIAL BUILDINGS IN BREA, CALIFORNIA
This property is located within the Orange County industrial market,
consisting of 228 million square feet. Brea is a desirable industrial
location due to its close proximity to Los Angeles County and the central
portion of Orange County. At September 30, 1996, overall vacancy was 7.8%,
down from 9.3% twelve months earlier. The property more specifically is
located within the North Orange County industrial submarket, which has an
inventory of 101 million square feet, or 44% of the total Orange County
market. As of September 30, 1996, the North Orange County vacancy rate was
6.6%, down from the 8.1% vacancy rate reported one year ago and 11% two years
ago. Approximately 3.7 million square feet of new industrial space was either
under construction or had been completed as of September 30, 1996.
SHOPPING CENTER IN SALINAS, CALIFORNIA
This property is located in Salinas, a strong retail community known as
the commercial center for much of Monterey County. At year end 1996, the
Salinas Class A retail market totaled approximately 2.9 million square feet,
an increase of approximately 127,000 square feet since year end 1995. Overall
vacancy was estimated at 5.1%. The most significant competitive issue facing
the Salinas retail market is Westridge Shopping Center, a new 680,000 square
foot retail development scheduled for completion in 1997, which will include
a PetsMart, Office Maxx, and Lucky's Super Saver Store.
OFFICE/RESEARCH AND DEVELOPMENT BUILDINGS IN COLUMBIA, MARYLAND
The property is located within the Howard County R&D market which
contains approximately 8.8 million square feet in a total of 179 buildings.
As of September 30, 1996, the Howard County market exhibited a vacancy rate
of approximately 5.6%, which represents an improvement from 1995, 1994 and
1993 when overall vacancy was 8.7%, 12% and 18%, respectively. The Columbia
R&D submarket contains a total of approximately 6.9 million square feet and,
at September 30, 1996, had a vacancy rate of approximately 5.3%. The market
has strengthened to the point where speculative R&D construction is now
underway in Howard County and in the Columbia market.
OFFICE/WAREHOUSE BUILDINGS IN PHOENIX, ARIZONA
This property is located in the metropolitan Phoenix market which has an
inventory of approximately 149 million square feet of industrial space, of
which 7.4% was vacant as of third quarter 1996, compared to the 6.6% and 7.1%
vacancy rates as of December 31, 1995 and 1994, respectively. More
specifically, the property is located within the Sky Harbor industrial
market, which consists of 27.7 million square feet, or 19% of the total
Phoenix industrial market. As of September 30, 1996, the Sky Harbor
industrial vacancy rate was approximately 8.7%. Approximately 4.4 million
square feet was under construction at September 30, 1996 in Phoenix, of which
728,000 square feet or 17% was in Sky Harbor.
WAREHOUSE BUILDING IN FONTANA, CALIFORNIA
This property is located within the greater Los Angeles industrial
market, consisting of 957 million square feet. More specifically, the
property is located within the Inland Empire industrial market, which
consists of 115 million square feet, or 12% of the total Los Angeles
industrial market. As of September 30, 1996, the Inland Empire industrial
vacancy rate was approximately 7.5% as compared to the 8.1% vacancy level
reported a year earlier and the 11% level reported two years earlier. As of
mid-year 1996, approximately 4.3 million square feet of speculative new
construction was underway in Los Angeles, 2.4 million of which was in the
Inland Empire.
OFFICE/INDUSTRIAL/RETAIL BUILDINGS IN LAS VEGAS, NEVADA
This property is located within the greater Las Vegas industrial market.
As of December 31, 1996, the total industrial inventory was 43 million square
feet, up from approximately 38 million square feet a year ago. Overall vacant
space totaled approximately 4.2 million square feet or 6.4% of the industrial
inventory. The Las
Vegas market absorbed 4.3 million square feet in 1996, down slightly from the
4.6 million absorbed in 1995 and the 5.7 million square feet absorbed in 1994.
ITEM 3. LEGAL PROCEEDINGS.
Other than described below, the Partnership is not a party to, nor are
any of its properties subject to, any material pending legal proceedings. A
tenant of one of the Partnership's properties has sued the Partnership for
breach of the lease. See Item 1.E.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no active market for the units. Trading in the Units is
sporadic and occurs solely through private transactions.
As of December 31, 1996, there were 12,800 holders of Units.
The Partnership's Amended and Restated Agreement of Limited Partnership
dated July 23, 1987, as amended to date (the "Partnership Agreement"),
requires that any Distributable Cash (as defined therein) be distributed
quarterly to the Partners in specified proportions and priorities. There are
no restrictions on the Partnership's present or future ability to make
distributions of Distributable Cash. Cash distributions paid in 1996 or
distributed after year end with respect to 1996 to the Limited Partners as a
group totaled $4,573,024. Cash distributions paid in 1995 or distributed
after year end with respect to 1995 to the Limited Partners as a group
totaled $6,389,408, including $2,313,164 of returned capital from the
proceeds of property sales.
Cash distributions exceeded net income in 1996 and, therefore, resulted
in a reduction of partners' capital. However, operating cash distributions
were less than net cash provided by operating activities. Reference is made
to the Partnership's Statement of Changes in Partners' Capital (Deficit) and
Statement of Cash Flows in Item 8 hereof.
ITEM 6. SELECTED FINANCIAL DATA
FOR YEAR FOR YEAR FOR YEAR FOR YEAR FOR YEAR
ENDED OR ENDED OR ENDED OR ENDED OR ENDED OR
AS OF AS OF AS OF AS OF AS OF
12/31/96 12/31/95(1) 12/31/94(2) 12/31/93(3) 12/31/92
------------- ------------- ------------- ------------- -------------
Revenues $ 7,716,609 $ 5,522,086 $ 6,096,743 $ 3,190,972 $ 2,903,022
Net Income $ 3,392,534 $ 2,248,715 $ 3,375,406 $ 50,380 $ 1,523,145
Net Income per Weighted Average
Limited Partnership Unit $ 40.72 $ 26.96 $ 40.42 $ .60 $ 18.21
Total Assets $ 59,590,134 $ 60,535,231 $ 64,530,075 $ 69,345,524 $ 71,637,001
Total Cash Distributions per Limited
Partnership Unit outstanding for
the entire period, including
amounts distributed after year end
with respect to the previous year $ 55.44 $ 77.36 $ 87.44 $ 32.50 $ 28.75
(1) During 1995, the Partnership recorded a valuation provision on one property
totaling $600,000 ($7.19 per Weighted Average Limited Partnership Unit).
Cash distributions include a return of capital of $28 per Unit.
(2) During 1994, the Partnership recorded a valuation provision on one property
totaling $1,400,000 ($16.76 per Weighted Average Limited Partnership Unit).
Net income also includes a gain of $1,790,470 recognized on the sale of two
investments. Cash distributions include a return of capital of $48 per Unit.
(3) During 1993, the Partnership recorded a valuation provision on two
properties totaling $2,000,000 ($23.93 per Weighted Average Limited
Partnership Unit).
ITEM 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
LIQUIDITY AND CAPITAL RESOURCES
The Partnership completed its offering of units of limited partnership
interest in December 1988. A total of 83,291 units were sold. The Partnership
received proceeds of $74,895,253, net of selling commissions and other
offering costs, which have been used for investment in real estate, for the
payment of related acquisition costs and for working capital reserves. The
Partnership made the real estate investments described in Item 1 herein. Two
investments have been sold, one in June 1994 and the other in August 1994.
As a result of the sales, capital of $6,281,804 has been returned to the
limited partners through December 31, 1996. The adjusted capital contribution
was reduced to $952 from $1,000 per unit in 1994, and then to $924 in July
1995. A portion of the sales proceeds was used to pay previously accrued, but
deferred, management fees to the advisor ($183,426 in 1995 and $1,259,988 in
1994).
At December 31, 1996, the Partnership had $12,039,157 in cash, cash
equivalents and short-term investments, of which $1,153,964 was used for cash
distributions to partners on January 30, 1997; the remainder will be used to
complete the funding of real estate investments or be retained as working
capital reserves. The source of future liquidity or cash distributions to
partners will be cash generated by the Partnership's real estate and
short-term investments. Quarterly distributions of cash from operations
relating to 1996 and 1995 were made at the annualized rate of 6% and 5.25%,
respectively, on the weighted average adjusted capital contribution during
the period. The distribution rate was increased due to the stabilization of
property operations and the attainment of appropriate cash reserve levels.
The Partnership maintains a fund for the purpose of repurchasing limited
partnership units pursuant to the terms and conditions set forth in the
Partnership Agreement. Two percent of cash flow, as defined, is designated
for this fund which had a balance of $56,736 and $32,572 at December 31, 1996
and 1995, respectively. Through December 31, 1996, the Partnership had
repurchased and retired 865 limited partnership units for an aggregate cost
of $813,236.
The carrying value of real estate investments in the financial statements
at December 31, 1996 is at depreciated cost, or if the investment's carrying
value is determined not to be recoverable through expected undiscounted
future cash flows, the carrying value is reduced to estimated fair market
value. The fair market value of such investments is further reduced by the
estimated cost of sale for properties held for sale. Carrying value may be
greater or less than current appraised value. At December 31, 1996, the
appraised value of certain investments exceeded the related carrying values
by an aggregate of approximately $6,900,000, and the remaining investments
had carrying values which exceeded their appraised values by a total of
approximately $1,100,000. The current appraised value of real estate
investments has been estimated by the Managing General Partner and is
generally based on a combination of traditional appraisal approaches
performed by the Partnership's advisor and independent appraisers. Because of
the subjectivity inherent in the valuation process, the estimated current
appraised value may differ significantly from that which could be realized if
the real estate were actually offered for sale in the marketplace.
RESULTS OF OPERATIONS
FORM OF REAL ESTATE INVESTMENTS
Effective January 1, 1996, the University Business Park joint venture was
dissolved and ownership of the joint venture assets was assigned to the
Partnership. Effective April 1, 1996, the Waters Landing II joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. Effective January 1, 1995, Palms Business Center joint venture
was restructured and the venture partner's ownership interest was assigned to
the Partnership. Effective August 1, 1995 and September 1, 1995,
respectively, the Santa Rita Plaza and Dahlia joint venture investments were
restructured to grant the Partnership control over management decisions.
Accordingly, these investments have been accounted for as wholly-owned
properties since those dates. The Puente Street investment is also a
wholly-owned property. The remaining investment in the
portfolio, Columbia Gateway Corporate Park, is structured as a joint venture
with a real estate development/management firm and an affiliate of the
Partnership. The C.S. Graham and Lakewood Apartments investments, which were
sold in 1994, were also joint ventures.
OPERATING FACTORS
Occupancy at University Business Park was at 100% at December 31, 1996,
an increase from 98% at December 31, 1995 and 89% a year earlier. Rental
rates in Phoenix continue to increase and occupancy levels remain high. In
January 1997, the Partnership executed a letter of intent to sell this
property in the second quarter of 1997 for a price which exceeds its carrying
value.
Overall occupancy at the Columbia Gateway Corporate Park was 94% at
December 31, 1996, an increase from 92% at the two preceding year ends.
Construction of a 46,000 square foot build-to-suit facility was completed
during the third quarter of 1994 and the tenant assumed occupancy on
September 1, 1994.
Occupancy at Puente Street has been 100% since the first quarter of 1994.
Notwithstanding the improvement in leasing, the carrying value of this
investment was reduced in 1993 and 1994 to estimated net realizable value,
due to then depressed market conditions.
During 1995, the Partnership undertook feasibility studies of alternative
development plans for the Waters Landing II site. Based on the results, it
was determined that it is not in the best interest of the limited partners to
develop this site. Accordingly, the carrying value was reduced in 1995 to
estimated fair market value less cost of sale.
Occupancy increased from 95% to 98% at Palms Business Center III and IV
during 1996. Occupancy was 92% at December 31, 1994. Rental rates in Las
Vegas have been increasing.
Occupancy at the Dahlia property remained at 100% during 1996, where it
has been since the first quarter of 1994. The Partnership had previously
received an interest in land located in Arizona as a rent settlement from a
former tenant. During the first quarter of 1996, upon liquidation of the
land, the Partnership received cash of approximately $332,000.
Santa Rita Plaza was 98% leased at December 31, 1996, an increase from
91% and 90% at the two preceding year ends. Performance at the Plaza has been
affected by tenant delinquencies and turnover due to business failures.
Current rental rates are below expectations, but new tenants appear
financially stable.
INVESTMENT RESULTS
Interest on short-term investments and cash equivalents decreased in 1996
as compared to 1995 as a result of lower average investment balances and
lower average yields. In 1995, interest on short-term investments and cash
equivalents increased significantly as compared to 1994, due to both an
increase in interest rates and a higher average investment balance resulting
from the temporary investment of proceeds from the C.S. Graham and Lakewood
sales.
SIGNIFICANT TRANSACTIONS
The Managing General Partner determined during the second quarter of 1995
not to develop the Waters Landing II site. Accordingly, the carrying value of
this investment was reduced to its estimated fair market value less cost of
sale with a $600,000 charge to operations. As a result of depressed market
conditions, the Managing General Partner determined that the carrying value
of the Puente Street investment should be reduced to estimated net realizable
value through a charge to operations of $1,400,000 in 1994. It had been
previously reduced by $1,500,000.
The gains recognized by the Partnership in 1994 on the sale of the C.S.
Graham and Lakewood properties were $409,982 and $1,380,488, respectively. An
additional $6,209 was received in 1995 in final settlement of the Lakewood
sale.
1996 COMPARED TO 1995
Exclusive of the investment valuation allowance of $600,000 on Waters
Landing II in 1995, total real estate operations were $3,542,491 in 1996 and
$2,828,940 in 1995. This increase of approximately $714,000 resulted from
improved operating results at University Business Park ($461,000) and Palms
Business Center III and IV ($281,000). These improvements were primarily
attributable to increased rental income due to higher rental rates and
occupancies at both properties, as well as a decrease in amortization expense
at University Business Park. Operating results at Salinas also improved by
$66,000. These increases were partially offset by a decline in net operating
income at Puente Street ($74,000) primarily caused by non-recurring revenue
recognized in 1995.
Exclusive of the proceeds from the settlement of past due tenant
receivables at Dahlia in 1996 ($332,000), and the payment of deferred
management fees in 1995 ($183,426), cash flow from operations decreased by
$71,000 between 1996 and 1995. This change is inconsistent with the increase
in operating results between the respective years primarily due to the timing
of cash distributions from joint ventures. In addition, cash flow from
operations decreased as a result of increases in working capital items.
1995 COMPARED TO 1994
Exclusive of the investment valuation allowances and the operating
results from C.S. Graham and Lakewood Apartments recognized in 1994
($273,429), total real estate operations were $2,828,940 in 1995 and
$2,733,686 in 1994. Operating income increased at Puente Street ($303,000)
and Columbia Gateway Park ($127,000). The improvement at Puente Street
results from the lease-up of the property during the first quarter of 1994.
The improvement at Columbia Gateway Park is due to improvements in rental
income. These increases were partially offset by a decline in net operating
income at Santa Rita Plaza ($275,000) due to tenant delinquencies and
turnover due to business failures. Net operating income also decreased at
Palms Business Center III and IV and at University Business Park due to costs
associated with tenant turnover in advance of lease expirations.
Exclusive of operating distributions from Lakewood Apartments and C.S.
Graham ($358,198) during 1994, cash flow from operations increased from
$2,128,608 to $4,738,007. Cash flow from operations in 1994 included two
significant transactions. The Partnership paid $1,259,988 of the previously
accrued, but deferred management fee to the advisor. In addition, the
Partnership granted rental concessions and paid a lease commission related to
the new tenant at Puente Street, which totalled $410,000. The balance of the
increase in cash flow from operations primarily stems from the assumption of
joint venture cash balances in connection with the three ownership
restructurings and from decreases in working capital items.
PORTFOLIO EXPENSES
The Partnership management fee is 9% of distributable cash flow from
operations after any increase or decrease in working capital reserves as
determined by the Managing General Partner. General and administrative
expenses consist primarily of real estate appraisal, printing, legal,
accounting and investor servicing fees.
1996 COMPARED TO 1995
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
decreased $29,000 or 9%, primarily due to a decrease in legal costs.
1995 COMPARED TO 1994
The Partnership management fee increased due to an increase in
distributable cash flow from operations. General and administrative expenses
increased $57,000 or 21%, primarily due to an increase in legal costs
associated with the various joint venture restructurings.
INFLATION
By their nature, real estate investments tend not to be adversely
affected by inflation. Inflation may result in appreciation in the value of
the Partnership's real estate investments over time if rental rates and
replacement costs increase. Declines in real property values during the
period of Partnership operations, due to market and economic conditions, have
overshadowed the positive effect inflation may have on the value of the
Partnership's investments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the Financial Statements of the Partnership included as a part of
this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Partnership has had no disagreements with its accountants on any
matters of accounting principles or practices or financial statement
disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) and (b) Identification of Directors and Executive Officers.
The following table sets forth the names of the directors and executive
officers of the Managing General Partner and the age and position held by
each of them as of December 31, 1996, as well as subsequent changes through
January 24, 1997.
NAME POSITION(S) WITH THE MANAGING GENERAL PARTNER AGE
- ----------------------------------------------------- ----------------------------------------------------- ---
Joseph W. O'Connor President, Chief Executive Officer and Director 50
Daniel J. Coughlin Managing Director and Director 44
Peter P. Twining(1) Managing Director, General Counsel and Director 50
Wesley M. Gardiner, Jr. Vice President 38
Daniel C. Mackowiak Principal Financial and Accounting Officer 45
James J. Finnegan(2) Managing Director, General Counsel and Director 36
(1) Through January 24, 1997 only
(2) As of January 25, 1997
Mr. O'Connor and Mr. Coughlin have served in an executive capacity since
the organization of the Managing General Partner on October 23, 1986. Mr.
Gardiner and Mr. Twining have served in their capacities since June 1994, and
Mr. Mackowiak has served in his capacity since January 1, 1996. All of these
individuals will continue to serve in such capacities until their successors
are elected and qualified.
(c) Identification of Certain Significant Employees.
None.
(d) Family Relationships.
None.
(e) Business Experience.
The Managing General Partner was incorporated in Massachusetts on October
23, 1986. The background and experience of the executive officers and
directors of the Managing General Partner are as follows:
Joseph W. O'Connor has been President, Chief Executive Officer and a
Director of AEW Real Estate Advisors, Inc. ("AEW"), formerly known as Copley
Real Estate Advisors, Inc. since January, 1982. He was a Principal of AEW
from 1985 to 1987 and has been a Managing Director of AEW since January 1,
1988. He has been active in real estate for 28 years. From June, 1967, until
December, 1981, he was employed by New England Mutual Life Insurance Company
("The New England"), which has been merged with and into Metropolitan Life
Insurance Company, most recently as a Vice President in which position he was
responsible for The New England's real estate portfolio. He received a B.A.
from Holy Cross College and an M.B.A. from Harvard Business School.
Daniel J. Coughlin was a Principal of AEW from 1985 to 1987 and has been
a Managing Director of AEW since January 1, 1988 and a Director of AEW since
July 1994. Mr. Coughlin has been active in financial management and control
for 22 years. From June, 1974 to December, 1981, he was a Real Estate
Administration
Officer in the Investment Real Estate Department at The New England. Since
January, 1982, he has been in charge of the asset management division of AEW.
Mr. Coughlin is a Certified Property Manager and a licensed real estate
broker. He received a B.A. from Stonehill College and an M.B.A. from Boston
University.
Peter P. Twining was a Managing Director and General Counsel of AEW until
January 24, 1997 when he resigned from all offices and directorships. As
such, he was responsible for general legal oversight and policy with respect
to AEW and its investment portfolios. Before being promoted to this position
in January 1994, he was a Vice President/Principal and senior lawyer
responsible for assisting in the oversight and management of AEW's legal
operations. Before joining AEW in 1987, he was a senior member of the Law
Department at The New England and was associated with the Boston law firm,
Ropes and Gray. Mr. Twining is a graduate of Harvard College and received his
J.D. in 1979 from Northeastern University.
Wesley M. Gardiner, Jr. joined AEW in 1990 and has been a Vice President
at AEW since January, 1994. From 1982 to 1990, he was employed by Metric
Realty, a nationally-known real estate investment advisor and syndication
firm, as a portfolio manager responsible for several public and private
limited partnerships. His career at AEW has included asset management
responsibility for the company's Georgia and Texas holdings. Presently, as a
Vice President and Team Leader, Mr. Gardiner has overall responsibility for
all the partnerships advised by AEW whose securities are registered under the
Securities and Exchange Act of 1934. He received a B.A. in Economics from the
University of California at San Diego.
Daniel C. Mackowiak has been a Vice President of AEW since January 1989
and has been a Vice President and the Principal Financial and Accounting
Officer of the Managing General Partner since January 1996. Mr. Mackowiak
previously held the offices of Chief Accounting Officer of AEW from January
1989 through April 1994 and Vice President and Principal Financial and
Accounting Officer of the Managing General Partner between January 1989 and
May 1994. From 1975 until joining AEW, he was employed by the public
accounting firm of Price Waterhouse, most recently as a Senior Audit Manager.
He is a certified public accountant and has been active in the field of
accounting his entire business career. He received a B.S. from Nichols
College and an M.B.A. from Cornell University.
James J. Finnegan is the Assistant General Counsel of AEW Capital
Management, L.P. ("AEW Capital Management") and has succeeded Peter Twining
as Managing Director, General Counsel and Director of AEW, a subsidiary of
AEW Capital Management. Mr. Finnegan served as Vice President and Assistant
General Counsel of Aldrich, Eastman & Waltch, L.P., a predecessor to AEW
Capital Management. Mr. Finnegan has over ten years of experience in real
estate law, including seven years of experience in private practice with
major New York City and Boston law firms. Mr. Finnegan also serves as the
firm's securities and regulatory compliance officer. Mr. Finnegan is a
graduate of the University of Vermont (B.A.) and Fordham University School of
law (J.D.).
Mr. O'Connor is a director of Evans Withycombe Residential, Inc., a
Maryland corporation organized as a real estate investment trust which is
listed for trading on the New York Stock Exchange. None of the other
directors of the Managing General Partner is a director of a company with a
class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934. All of the directors and officers of the Managing
General Partner also serve as directors and officers of one or more
corporations which serve as general partners of publicly-traded real estate
limited partnerships which are affiliated with the Managing General Partner.
(f) Involvement in Certain Legal Proceedings.
None.
ITEM 11. EXECUTIVE COMPENSATION.
Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense
reimbursements from the Partnership. See Note 1, Note 2 and Note 6 of Notes
to Financial Statements.
The following table sets forth the amounts of the fees and cash
distributions and reimbursements for out-of-pocket expenses which the
Partnership paid to or accrued for the account of the General Partners and
their affiliates for the year ended December 31, 1996. Cash distributions to
General Partners include amounts distributed after year end with respect to
1996.
AMOUNT OF
COMPENSATION AND
RECEIVING ENTITY TYPE OF COMPENSATION REIMBURSEMENT
- ---------------------------------------------- ---------------------------------------------- -----------------
General Partners Share of Distributable Cash $ 46,192
AEW Real Estate Advisors, Inc. (formerly known Management Fees and Reimbursement of Expenses 472,586
as Copley Real Estate Advisors, Inc.)
New England Securities Corporation Servicing Fees plus out-of-pocket
reimbursements 18,733
-----------
TOTAL $ 537,511
-----------
-----------
For the year ended December 31, 1996 the Partnership allocated $35,703 of
taxable income to the General Partners.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security Ownership of Certain Beneficial Owners
No person or group is known by the Partnership to be the beneficial owner
of more than 5% of the outstanding Units at December 31, 1996. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain
opinions of counsel or judicial decisions.
Except as expressly provided in the Partnership Agreement, the right to
manage the business of the Partnership is vested exclusively in the Managing
General Partner.
(b) Security Ownership of Management.
The General Partners of the Partnership owned no Units at December 31,
1996.
(c) Changes in Control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the
Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Partnership has no relationships or transactions to report other than
as reported in Item 11, above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements--The Financial Statements listed on the
accompanying Index to Financial Statements and Schedule are filed as part
of this Annual Report.
(2) Financial Statement Schedule--The Financial Statement Schedule
listed on the accompanying Index to Financial Statements and Schedule are
filed as part of this Annual Report.
(3) Exhibits--The Exhibits listed in the accompanying Exhibit Index
are filed as a part of this Annual Report and incorporated in this Annual
Report as set forth in said Index.
(b) Reports on Form 8-K. During the last quarter of the year ending
December 31, 1996, the Partnership filed no Current Report on Form 8-K.
New England Pension Properties V;
A Real Estate Limited Partnership
Financial Statements
* * * * * * * *
December 31, 1996
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
PAGE
----
Report of Independent Accountants.....................................
Financial Statements:
Balance Sheet--December 31, 1996 and 1995..........................
Statement of Operations--Years ended December 31, 1996, 1995
and 1994.........................................................
Statement of Changes in Partners' Capital (Deficit)--Years ended
December 31, 1996, 1995 and 1994.................................
Statement of Cash Flows--Years ended December 31, 1996, 1995
and 1994.........................................................
Notes to Financial Statements.........................................
Financial Statement Schedule:
Schedule III--Real Estate and Accumulated Depreciation at
December 31, 1996................................................
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
New England Pension Properties V;
A Real Estate Limited Partnership
In our opinion, based upon our audits and the reports of other auditors, the
financial statements listed in the accompanying index present fairly, in all
material respects, the financial position of New England Pension Properties
V; A Real Estate Limited Partnership (the "Partnership") at December 31, 1996
and 1995, and the results of its operation and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of Fifth Copley Corp., the Managing General Partner of the
Partnership; our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
the Partnership's investments in Santa Rita Plaza, Palms Business Center III
and IV, and Dahlia for the years ended December 31, 1996, 1995 and 1994.
Operating income for these investments aggregated $2,956,934 and $1,594,233
for the years ended December 31, 1996 and 1995 and equity in joint venture
income aggregated $2,200,515 for the year ended December 31, 1994. We also
did not audit the financial statements of the Partnership's investment in
Puente Street for the years ended December 31, 1996 and 1995. Operating
income for this investment totaled $711,006 and $784,895 for the years ended
December 31, 1996 and 1995. We also did not audit the financial statements of
the Partnership's investment in University Business Park for the year ended
December 31, 1996. Operating income for this investment totaled $732,439 for
the year ended December 31, 1996. We also did not audit the financial
statements of the Partnership's Columbia Gateway Corporate Park joint venture
investee for the years ended December 31, 1996 and 1995, which results of
operations are recorded using the equity method of accounting in the
Partnership's financial statements. Equity in joint venture income for this
venture was $360,214 and $371,986 for the years ended December 31, 1996 and
1995. Those statements were audited by other auditors whose reports thereon
have been furnished to us, and our opinion expressed herein, insofar as it
relates to the amounts included for operating income and equity in joint
venture income for Santa Rita Plaza, Palms Business Center III and IV, and
Dahlia for the years ended December 31, 1996, 1995 and 1994, for Puente
Street for the years ended December 31, 1996 and 1995, for University
Business Park for the year ended December 31, 1996, and for Columbia Gateway
Corporate Park for the years ended December 31, 1996 and 1995, is based
solely on the reports of the other auditors. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by the Managing General
Partner, and evaluating the overall financial statement presentation. We
believe that our audits and the reports of other auditors for the years ended
December 31, 1996, 1995 and 1994 provide a reasonable basis for the opinion
expressed above.
/s/ Price Waterhouse LLP
- ------------------------
Boston, Massachusetts
March 24, 1997
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31,
----------------------------
1996 1995
------------- -------------
Assets
Real estate investments:
Property, net.................................................. $ 42,828,754 $ 37,058,053
Joint ventures................................................. 4,722,223 11,821,773
------------- -------------
47,550,977 48,879,826
Cash and cash equivalents...................................... 4,706,279 3,790,598
Short-term investments......................................... 7,332,878 7,864,807
------------- -------------
$ 59,590,134 $ 60,535,231
------------- -------------
------------- -------------
Liabilities and Partners' Capital
Accounts payable............................................... $ 108,026 $ 120,505
Accrued management fees........................................ 57,064 50,008
Deferred management and disposition fees....................... 596,583 368,161
------------- -------------
Total liabilities.............................................. 761,673 538,674
------------- -------------
Commitments to fund real estate investments
Partners' capital (deficit):
Limited partners ($924 per unit; 160,000 units authorized,
82,426 and 82,536 issued and outstanding, respectively)...... 58,916,206 60,073,461
General partners............................................... (87,745) (76,904)
------------- -------------
Total partners' capital........................................ 58,828,461 59,996,557
------------- -------------
$ 59,590,134 $ 60,535,231
------------- -------------
------------- -------------
(See accompanying notes to financial statements)
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1995 1994
------------ ------------ -----------
Investment Activity
Property rentals........................................................ $ 6,566,057 $ 3,400,015 $ 937,006
Interest income on loan to ground lessor................................ 185,379 63,455 --
Property operating expenses............................................. (1,775,678) (839,565) (315,857)
Ground rent expense..................................................... (390,000) (162,500) --
Depreciation and amortization........................................... (1,403,481) (937,015) (410,119)
------------ ------------ -----------
3,182,277 1,524,390 211,030
Joint venture earnings.................................................. 360,214 1,304,550 2,796,085
Investment valuation allowances......................................... -- (600,000) (1,400,000)
------------ ------------ -----------
Total real estate operations............................................ 3,542,491 2,228,940 1,607,115
Gain on sales of property by joint ventures............................. -- 6,209 1,790,470
------------ ------------ -----------
Total real estate activity.............................................. 3,542,491 2,235,149 3,397,585
Interest on cash equivalents and short-term investments................. 604,959 747,857 573,182
------------ ------------ -----------
Total investment activity............................................... 4,147,450 2,983,006 3,970,767
------------ ------------ -----------
Portfolio Expenses
Management fee.......................................................... 456,846 407,217 325,746
General and administrative.............................................. 298,070 327,074 269,615
------------ ------------ -----------
754,916 734,291 595,361
------------ ------------ -----------
Net Income.............................................................. $ 3,392,534 $ 2,248,715 $ 3,375,406
------------ ------------ -----------
Net income per weighted average limited partnership unit................ $ 40.72 $ 26.96 $ 40.42
------------ ------------ -----------
Cash distributions per limited partnership unit outstanding for the
entire year........................................................... $ 53.73 $ 74.75 $ 87.92
------------ ------------ -----------
Weighted average number of limited partnership units outstanding during
the year.............................................................. 82,486 82,582 82,675
------------ ------------ -----------
(See accompanying notes to financial statements)
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1996 1995 1994
-------------------------- --------------------- ----------------------
GENERAL LIMITED GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS PARTNERS PARTNERS PARTNERS PARTNERS
---------- ----------- --------- ------------ --------- ------------
Balance at beginning of
year..................... $(76,904) $60,073,461 $(60,383) $64,086,525 $(60,791) $68,092,152
Repurchase of limited
partnership units........ -- (84,104) -- (64,360) -- (77,384)
Cash distributions......... (44,766) (4,431,760) (39,008) (6,174,932) (33,346) (7,269,895)
Net income................. 33,925 3,358,609 22,487 2,226,228 33,754 3,341,652
---------- ----------- --------- ------------ --------- ------------
Balance at end of year..... $(87,745) $58,916,206 $(76,904) $60,073,461 $(60,383) $64,086,525
---------- ----------- --------- ------------ --------- ------------
---------- ----------- --------- ------------ --------- ------------
(See accompanying notes to financial statements)
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
Cash flows from operating activities:
Net income.............................................................. $ 3,392,534 $ 2,248,715 $ 3,375,406
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 1,403,481 937,015 410,119
Gain on sales of property by joint ventures............................. -- (6,209) (1,790,470)
Investment valuation allowances......................................... -- 600,000 1,400,000
Increase in deferred lease commissions.................................. (126,625) (85,768) (649,813)
Equity in joint venture earnings........................................ (360,214) (1,304,550) (2,796,085)
Cash distributions from joint ventures.................................. 335,500 1,850,619 3,930,364
Decrease (increase) in investment income receivable..................... (36,107) 16,323 44,546
Decrease (increase) in property working capital......................... 350,402 447,121 (359,316)
Payment of deferred management fee...................................... -- (183,426) (1,259,988)
Increase in operating liabilities....................................... 222,999 218,167 182,043
------------ ------------ ------------
Net cash provided by operating activities............................... 5,181,970 4,738,007 2,486,806
------------ ------------ ------------
Cash flows from investing activities:
Return of capital from joint venture.................................... -- 1,305,765 --
Net proceeds from sale of investments................................... -- 6,209 7,749,728
Deferred disposition fees............................................... -- -- 267,715
Investment in joint ventures............................................ -- (138,242) (790,209)
Investments in property................................................. (334,973) (100,739) (292,614)
Loan to ground lessor................................................... -- (1,750,000) --
Repayments received on loan to ground lessor............................ 61,278 -- --
Decrease (increase) in short-term investments, net...................... 568,036 (2,967,346) 3,691,279
------------ ------------ ------------
Net cash provided by (used in) investing activities..................... 294,341 (3,644,353) 10,625,899
------------ ------------ ------------
Cash flows from financing activities:
Distributions to partners............................................... (4,476,526) (6,213,940) (7,303,241)
Repurchase of limited partnership units................................. (84,104) (64,360) (77,384)
------------ ------------ ------------
Net cash used in financing activities................................... (4,560,630) (6,278,300) (7,380,625)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents.................... 915,681 (5,184,646) 5,732,080
Cash and cash equivalents:
Beginning of year....................................................... 3,790,598 8,975,244 3,243,164
------------ ------------ ------------
End of year............................................................. $ 4,706,279 $ 3,790,598 $ 8,975,244
------------ ------------ ------------
------------ ------------ ------------
NON-CASH TRANSACTIONS:
Two of the Partnership's joint venture investments were converted to
wholly-owned properties in 1996. The carrying value of these investments at
their respective conversion dates totalled $7,122,323. Three of the
Partnership's joint venture investments were converted to wholly-owned
properties in 1995. The carrying value of these investments at their respective
conversion dates totalled $27,938,099.
(See accompanying notes to financial statements)
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND BUSINESS
GENERAL
New England Pension Properties V; A Real Estate Limited Partnership (the
"Partnership") is a Massachusetts limited partnership organized for the purpose
of investing primarily in to-be-developed, newly constructed and existing
income-producing real properties. It primarily serves as an investment for
qualified pension and profit sharing plans and other entities intended to be
exempt from federal income tax. The Partnership commenced operations in May
1987, and acquired the seven real estate investments it currently owns prior to
the end of 1989. It intends to dispose of its investments within twelve years of
their acquisition, and then liquidate.
The Managing General Partner of the Partnership is Fifth Copley Corp., a
wholly-owned subsidiary of AEW Real Estate Advisors, Inc. ("AEW"), formerly
known as Copley Real Estate Advisors, Inc. ("Copley"). The associate general
partner is ECOP Associates Limited Partnership, a Massachusetts limited
partnership, the general partners of which are managing directors of AEW and/or
officers of the Managing General Partner. Subject to the Managing General
Partner's overall authority, the business of the Partnership is managed by AEW
pursuant to an advisory contract.
On December 10, 1996, Copley's parent, New England Investment Companies,
Limited Partnership ("NEIC"), a publicly traded master limited partnership,
acquired certain assets subject to then existing liabilities from Aldrich,
Eastman & Waltch, Inc. and its affiliates and principals (collectively "the AEW
Operations"). Simultaneously, a new entity, AEW Capital Management L.P., was
formed into which NEIC contributed its interest in Copley and its affiliates. As
a result, the AEW Operations were combined with Copley to form the business
operations of AEW Capital Management, L.P. This transaction is not expected to
have a material effect on the operations of the Partnership.
Prior to August 30, 1996, New England Mutual Life Insurance Company ("The
New England") was NEIC's principal unit holder and owner of all the outstanding
stock of NEIC's general partner. On August 30, 1996, The New England merged with
and into Metropolitan Life Insurance Company ("Met Life"). Met Life is the
surviving entity and, therefore, through a wholly-owned subsidiary, became the
owner of the units of partnership interest previously owned by The New England
and of the stock of NEIC's general partner. This transaction is not expected to
have a material effect on the operations of the Partnership.
The Partnership maintains a repurchase fund for the purpose of repurchasing
limited partnership units. Two percent of cash flow, as defined, is designated
for this fund which had a balance of $56,736 and $32,572 at December 31, 1996
and 1995, respectively. Through December 31, 1996 and 1995, the Partnership had
repurchased and retired 865 units and 755 units, respectively.
MANAGEMENT
AEW, as advisor, is entitled to receive stipulated fees from the
Partnership in consideration of services performed in connection with the
management of the Partnership and the acquisition and disposition of
Partnership investments in real property. Partnership management fees are 9%
of distributable cash flow from operations, as defined, before deducting such
fees. Payment of 50% of management fees is deferred until cash distributions
to limited partners exceed a specified rate or until payable from sales
proceeds. AEW is also reimbursed for expenses incurred in connection with
administering the Partnership ($15,740 in 1996, $20,081 in 1995, and $15,322
in 1994). Acquisition fees were based on 2% of gross proceeds from the
offering. Disposition fees are generally 3% of the selling price of property,
but are subject to the prior receipt by the limited partners of their capital
contributions plus a stipulated return thereon. Deferred disposition fees
were $267,715 at December 31, 1996 and 1995.
New England Securities Corporation, an indirect subsidiary of Met Life, is
engaged by the Partnership to act as its unit holder servicing agent. Fees and
out-of pocket expenses for such services totaled $18,733, $16,774 and $26,717,
in 1996, 1995 and 1994, respectively.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner to make
estimates affecting the reported amounts of assets and liabilities, and of
revenues and expenses. In the Partnership's business, certain estimates require
an assessment of factors not within management's control, such as the ability of
tenants to perform under long-term leases and the ability of the properties to
sustain their occupancies in changing markets. Actual results, therefore, could
differ from those estimates.
REAL ESTATE JOINT VENTURES
Investments in joint ventures, including loans made to venture partners,
which are in substance real estate investments, are stated at cost plus
(minus) equity in undistributed joint venture income (losses). Allocations of
joint venture income (losses) were made to the Partnership's venture partners
as long as they had substantial economic equity in the project. Economic
equity is measured by the excess of the appraised value of the property over
the Partnership's total cash investment plus accrued preferential returns and
interest thereon. Currently, the Partnership records an amount equal to 100%
of the operating results of each joint venture, after the elimination of all
inter-entity transactions, except for one venture jointly owned by an
affiliate of the Partnership which has substantial economic equity in the
project. Joint ventures are consolidated with the accounts of the
Partnership if, and when, the venture partner no longer shares in the control
of the business.
PROPERTY
Property includes land and buildings and improvements, which are stated at
cost, less accumulated depreciation, and other operating net assets
(liabilities). The initial carrying value of a property previously owned by a
joint venture equals the Partnership's carrying value of the predecessor
investment on the conversion date.
CAPITALIZED COSTS, DEPRECIATION, AND AMORTIZATION
Maintenance and repair costs are expensed as incurred. Significant
improvements and renewals are capitalized. Depreciation is computed using the
straight-line method based on estimated useful lives of the buildings and
improvements. Leasing costs are also capitalized and amortized over the related
lease terms.
Acquisition fees have been capitalized as part of the cost of real estate
investments. Amounts not related to land are amortized using the straight-line
method over the estimated useful lives of the underlying property.
Tenant leases at the properties provide for rental increases over the
respective lease terms. Rental revenue is being recognized on a straight-line
basis over the lease terms.
REALIZABILITY OF REAL ESTATE INVESTMENTS
The Partnership considers a real estate investment to be impaired when it
determines the carrying value of the investment is not recoverable through
expected undiscounted cash flows generated from the operations and disposition
of property. The impairment loss is based on the excess of the investment's
carrying value over its estimated fair market value. For investments being held
for sale, the impairment loss also includes estimated costs of sale. Property
held for sale is not depreciated during the holding period. Prior to the
adoption of Statement of Financial Accounting Standards No. 121 effective
January 1, 1995, the impairment loss was measured based on the excess of the
investment's carrying value over its net realizable value. (See Notes 3 and 4.)
The Waters Landing II investment was reduced to its estimated fair market
value, less costs of sale, during 1995. During 1994, the carrying value of the
Puente Street investment was reduced to its estimated net realizable value. (See
Notes 3 and 4).
The carrying value of an investment may be more or less than its current
appraised value. At December 31, 1996 and 1995, the appraised values of certain
investments exceeded their related carrying values by an aggregate of $6,900,000
and $4,900,000, respectively, and the appraised values of the remaining
investments were less than their related carrying values by an aggregate of
$1,100,000 and $2,400,000, respectively.
The current appraised value of real estate investments has been estimated by
the Managing General Partner, and is generally based on a combination of
traditional appraisal approaches performed by the advisor and independent
appraisers. Because of the subjectivity inherent in the valuation process, the
estimated current appraised value may differ significantly from that which could
be realized if the real estate were actually offered for sale in the
marketplace.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents are stated at cost, plus accrued interest. The Partnership
considers all highly liquid debt instruments purchased with a maturity of ninety
days or less to be cash equivalents; otherwise, they are classified as
short-term investments.
The Partnership has the positive intent and ability to hold all short-term
investments to maturity; therefore, short-term investments are carried at cost
plus accrued interest which approximates market value. At December 31, 1996 and
1995, all investments were in commercial paper with less than three months and
seven months, respectively, remaining to maturity.
DEFERRED DISPOSITION FEES
Disposition fees due to AEW related to sales of investments are included in
the determination of gains or losses resulting from such transactions. According
to the terms of the advisory contract, payment of such fees has been deferred
until the limited partners first receive their capital contributions, plus a
stipulated return thereon.
INCOME TAXES
A partnership is not liable for income taxes and, therefore, no provision
for income taxes is made in the financial statements of the Partnership. A
proportionate share of the Partnership's income is reportable on each partner's
tax return.
PER UNIT COMPUTATIONS
Net income per unit is computed based on the weighted average number of
units of limited partnership interest outstanding during the year. The actual
per unit amount will vary by partner depending on the date of admission to, or
withdrawal from, the Partnership.
NOTE 3--REAL ESTATE JOINT VENTURES
The Partnership had invested in eight real estate joint ventures, each
organized as general partnerships with a real estate development/management firm
and, in two cases, with an affiliate of the Partnership. Two joint venture
projects were sold in 1994, three joint ventures were converted to wholly-owned
investments in 1995 and two joint ventures were converted to wholly-owned
investments in 1996. Joint venture investments are in either of two forms. In
one form, the Partnership makes an equity contribution which is subject to
preferential cash distributions at a specified rate and to priority
distributions with respect to sale or refinancing transactions. In the second
form of joint venture, the Partnership makes an equity contribution to the
venture, subject to preferential returns, and also makes a loan to its venture
partner which, in turn, contributes the proceeds to the venture. The loans bear
interest at a specified rate, mature in full in ten years, and are secured by
the venture partner's interest in the venture. These loans have been accounted
for as a real estate investment due to the attendant risks of ownership. The
joint venture agreements provide for the funding of cash flow deficits in
proportion to ownership interests and for the dilution of ownership share in the
event a venture partner does not contribute proportionately.
The respective real estate management/development firm is responsible for
day-to-day development and operating activities, although overall authority and
responsibility for the business is shared by the venturers. The real estate
development/management firms or their affiliates also provide various services
to the respective joint ventures for a fee.
The following is a summary of cash invested in joint ventures, net of
returns of capital and excluding acquisition fees:
ORIGINAL DECEMBER 31,
INVESTMENT/ RATE OF OWNERSHIP --------------------------
LOCATION RETURN/INTEREST INTEREST 1996 1995
- ----------------- ----------------- ----------- ------------ ------------
Waters Landing II 10.5% 60%(E) $ -- $1,338,998
Germantown, MD 10.5% (L) $ -- $ 892,665
University
Business Park
Phoenix, AZ 10.0% 60% $ -- $7,858,213
Columbia Gateway
Corporate Park
Columbia, MD 10.5% 15.25% $5,517,497 $5,517,497
(E) Equity (L) Loan
WATERS LANDING II
On May 26, 1987, the Partnership entered into a joint venture with an
affiliate of Oxford Development Corporation to acquire land and develop an
apartment complex.
The Waters Landing II joint venture was restructured, and the investment is
being accounted for as a wholly-owned property effective April 1, 1996. (See
Note 4.)
UNIVERSITY BUSINESS PARK
On September 30, 1987, the Partnership entered into a joint venture
agreement with an affiliate of The Hewson Company. Effective January 1, 1996,
the joint venture was dissolved and the venture partner's ownership interest was
assigned to the Partnership. (See Note 4.)
COLUMBIA GATEWAY CORPORATE PARK
On December 21, 1987, the Partnership entered into a joint venture agreement
with an affiliate of the Partnership and an affiliate of Manekin Corporation to
construct and operate seven research and
development/office buildings, of which six have been constructed to date.
The Partnership committed to make a $6,402,000 equity contribution to the
joint venture. The Partnership and its affiliate collectively have a 50%
ownership interest in the joint venture. The minimum future rental payments
to the venture under non-cancelable operating leases are: $1,176,271 in 1997;
$1,115,722 in 1998; $1,007,807 in 1999; $411,261 in 2000 and 2001; and
$1,096,697 thereafter.
At December 31, 1993, the Managing General Partner determined that the
carrying value of this investment would not be recovered through estimated
undiscounted future cash flows. Accordingly, the carrying value was reduced by
$500,000 to estimated net realizable value.
SALE OF C.S. GRAHAM AND LAKEWOOD
On June 30, 1987, the Partnership entered into a joint venture agreement
with an affiliate of Connell Scott and Associates to own and operate a warehouse
facility. The Partnership contributed a total of $3,185,246 to the venture. On
June 17, 1994, the joint venture sold its property. The total sales price was
$3,925,000. After closing costs, the Partnership received proceeds of $3,720,076
and recognized a gain of $409,982 ($4.91 per weighted average limited
partnership unit). A disposition fee of $117,750 was accrued but not paid to the
advisor.
On August 12, 1988, the Partnership entered into a joint venture with an
affiliate of the Partnership and with an affiliate of Evans Withycombe Company
to construct and operate an apartment complex. The Partnership's total equity
contribution was $3,167,615. On August 17, 1994, the joint venture sold
its property to a real estate investment trust sponsored by Evans Withycombe.
After closing costs, the payment of preferential returns to the Partnership, and
the allocation to the venture partner, the Partnership received proceeds of
$4,297,367, which resulted in a gain of $1,380,488 ($16.53 per weighted average
limited partnership unit). A disposition fee of $149,965 was accrued but not
paid to the advisor. An additional $6,209 was received in 1995 in final
settlement of the Lakewood sale.
On September 15, 1994, the Partnership made a capital distribution of
$3,968,640 ($48 per limited partnership unit) from the proceeds of the C.S.
Graham and Lakewood sales. A second capital distribution of $2,313,164 ($28 per
limited partnership unit) was made in July, 1995. A portion of the proceeds was
used to pay previously accrued, but deferred, management fees due to the advisor
($183,426 in 1995 and $1,259,988 in 1994).
Summarized Financial Information
The following summarized financial information is presented in the aggregate
for the joint ventures:
ASSETS AND LIABILITIES
DECEMBER 31,
----------------------------
1996 1995
------------- -------------
Assets
Real property, at cost less accumulated depreciation of
$1,852,988 and $3,988,677, respectively.................... $ 15,670,283 $ 22,343,780
Other....................................................... 321,328 484,715
------------- -------------
15,991,611 22,828,495
Liabilities.................................................... 43,521 187,308
------------- -------------
Net assets..................................................... $ 15,948,090 $ 22,641,187
------------- -------------
------------- -------------
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
Revenue
Rental income....................................................... $ 1,941,458 $ 4,437,415 $ 8,058,767
Other income........................................................ 18,163 146,660 222,180
------------ ------------ ------------
1,959,621 4,584,075 8,280,947
------------ ------------ ------------
Expenses
Operating expenses.................................................. 482,749 1,402,041 2,837,050
Depreciation and amortization....................................... 295,841 1,032,349 1,727,610
------------ ------------ ------------
778,590 2,434,390 4,564,660
------------ ------------ ------------
Net Income.............................................................. $ 1,181,031 $ 2,149,685 $ 3,716,287
------------ ------------ ------------
------------ ------------ ------------
Liabilities and expenses exclude amounts owed and attributable to the
Partnership and (with respect to two joint ventures) its affiliates on behalf of
their various financing arrangements with the joint ventures.
The C.S. Graham and Lakewood investments were sold on June 17, 1994 and
August 17, 1994, respectively. The above amounts include their results of
operations through the respective sale dates. The Palms Business Center, Santa
Rita Plaza, Dahlia, University Business Park and Waters Landing II investments
were converted to wholly-owned properties effective January 1, 1995, August 1,
1995, September 1, 1995, January 1, 1996 and April 1, 1996, respectively. The
above amounts include their results of operations through their respective
conversion dates.
NOTE 4--PROPERTY
PALMS BUSINESS CENTER III AND IV
Effective January 1, 1995, the Palms Business Center joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. The carrying value at conversion ($10,308,265) was allocated to
land, building and improvements and other net operating assets.
The buildings and improvements (thirteen commercial buildings in Las Vegas,
Nevada) are being depreciated over 25 years, beginning January 1, 1995.
SANTA RITA PLAZA
Effective August 1, 1995, the Santa Rita Plaza joint venture was
restructured into a limited partnership, whereby the Partnership was granted
control over management decisions. Accordingly, the investment is being
accounted for as a wholly-owned property as of that date. The carrying value of
the joint venture investment at conversion ($10,216,659) was allocated to
building and improvements, mortgage loan receivable from the ground lessor and
other net operating assets. On this same date, the Partnership made a
fifteen-year loan in the amount of $1,750,000 to the ground lessor, who used a
portion of the proceeds to repay a loan from the Santa Rita venture which, in
turn, paid approximately $1,300,000 to the Partnership as a partial return of
its capital investment in the venture. The Partnership can require full
payment of the loan after August 1, 2000. The ground lease requires an annual
base payment of $390,000 per year through 2063, plus 11.55% of rents, as
defined.
The buildings and improvements (a shopping center in Salinas, CA) are being
depreciated over 25 years beginning August 1, 1995. The loan to ground lessor
bears interest at 8.75%, with payments to be made monthly based on a 15 year
amortization schedule, and is secured by the ground lessor's interest in the
Santa Rita Plaza land.
DAHLIA
Effective September 1, 1995, the Dahlia joint venture was restructured into
a limited partnership, whereby the Partnership was granted control over
management decisions. Accordingly, the investment is being accounted for as a
wholly-owned property as of that date. The carrying value at conversion
($7,413,175) was allocated to land, building and improvements, and other net
operating assets. During 1993, the joint venture agreed to a settlement with a
former tenant for past due rent. This settlement was secured by an attachment on
36 acres of land in Arizona. During the first quarter of 1996, the land was
liquidated. The Partnership received $332,489, which exceeded the carrying value
of the receivable by approximately $32,000.
The buildings and improvements (a warehouse facility in Fontana, CA) are
being depreciated over 25 years beginning September 1, 1995.
PUENTE STREET
Effective June 1, 1991, the Partnership assumed total ownership of this
property due to the venture partner's inability to fund its proportionate share
of operating deficits. The property includes an industrial building, together
with a parking lot and storage area in Brea, California.
The Managing General Partner determined that the carrying value of this
investment exceeded its estimated net realizable value because of the effect of
depressed market conditions on rental rates. Accordingly, the carrying value was
reduced to its estimated net realizable value by $1,500,000 in 1993. Due to a
further deterioration in market conditions, the carrying value was further
reduced during the fourth quarter of 1994 by $1,400,000.
The building and improvements are being depreciated over 30 years beginning
June 1, 1991.
In 1995, the Partnership was named as a defendant in a complaint filed in
the Superior Court of the State of California for the County of Orange by an
existing tenant, Bridgeport Management Services, Inc. alleging breach of lease.
The Partnership filed an answer denying the allegations presented by the
plaintiff. It is expected that this matter will be settled with no significant
effect on the Partnership's financial position.
UNIVERSITY BUSINESS PARK
Effective January 1, 1996, the University Business Park joint venture was
dissolved and the venture partner's ownership interest was assigned to the
Partnership. The carrying value of the joint venture investment at conversion
($5,630,581) was allocated to land, building and improvements and other net
operating assets.
The building and improvements (five industrial buildings in Phoenix, AZ) are
being depreciated over 25 years, beginning January 1, 1996.
In January 1997, the Partnership executed a letter of intent to sell this
property during the second quarter of 1997, for a price which exceeds its
carrying value of approximately $5,460,000 at December 31, 1996. For the year
then ended, the Partnership recognized revenue of $1,196,960, operating expenses
of $464,521 and depreciation expense of $183,456 related to this property.
WATERS LANDING II
During the second quarter of 1995, the Managing General Partner determined
that it was not in the best interest of the limited partners to develop the
Waters Landing II site, which is located in Germantown, MD. Accordingly, the
carrying value of the joint venture investment was reduced to its estimated net
fair market value with the recognition of an investment valuation allowance of
$600,000.
In the second quarter of 1996, the Waters Landing II joint venture was
restructured and the venture partner's ownership interest was assigned to the
Partnership. Since April 1, 1996, the investment has been accounted for as a
wholly-owned property. The carrying value of the joint venture investment at
conversion ($1,491,742) was allocated to land and the investment valuation
allowance.
The following is a summary of the Partnership's investment in property (six
in 1996 and four in 1995):
DECEMBER 31,
----------------------------
1996 1995
------------- -------------
Land........................................................... $ 11,475,045 $ 7,548,949
Buildings and improvements..................................... 34,383,256 30,323,985
Accumulated depreciation....................................... (2,797,876) (1,596,044)
Investment valuation allowances................................ (3,500,000) (2,900,000)
Loan to ground lessor.......................................... 1,664,726 1,726,003
Lease commissions and other assets, net........................ 1,667,594 1,576,781
Accounts receivable............................................ 576,334 900,017
Accounts payable............................................... (640,325) (521,638)
------------- -------------
$ 42,828,754 $ 37,058,053
------------- -------------
------------- -------------
Tenant leases provide for minimum rents, subject to periodic adjustment.
Tenants are also generally obligated to reimburse their pro-rata share of
operating expenses. The minimum rents due under non-cancelable operating leases
at all of the Partnership's properties are as follows: $5,284,576 in 1997;
$4,477,786 in 1998; $3,724,915 in 1999; $3,147,607 in 2000; $1,927,689 in 2001
and $6,182,842 thereafter.
NOTE 5--INCOME TAXES
The Partnership's income for federal income tax purposes differs from that
reported in the accompanying statement of operations as follows:
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
Net income per financial statements..................................... $ 3,392,534 $ 2,248,715 $ 3,375,406
Timing differences:
Joint venture earnings................................................ 87,002 1,532,140 329,584
Property rentals...................................................... (77,972) (1,844,941) (433,648)
Expenses.............................................................. 230,364 31,747 (1,107,117)
Depreciation and amortization......................................... (61,668) 602,925 21
Investment valuation allowances....................................... -- 600,000 1,400,000
Gain on sale.......................................................... -- -- 483,030
------------ ------------ ------------
Taxable income.......................................................... $ 3,570,260 $ 3,170,586 $ 4,047,276
------------ ------------ ------------
------------ ------------ ------------
NOTE 6--PARTNERS' CAPITAL
Allocation of net income from operations and distributions of distributable
cash from operations, as defined, are in the ratio of 99% to the limited
partners and 1% to the general partners. Cash distributions are made quarterly.
Net sale proceeds and financing proceeds are allocated first to limited
partners to the extent of their contributed capital plus a stipulated return
thereon, as defined, second to pay disposition fees, and then 85% to the limited
partners and 15% to the general partners. The adjusted capital contribution per
limited partnership unit was reduced from $1,000 to $952 in 1994, and further
reduced to $924 in 1995, as a result of the return of capital from the sale of
two investments. No capital distributions have been made to the general
partners. Income from a sale is allocated in proportion to the distribution of
related
proceeds, provided that the general partners are allocated at least 1%.
Income or losses from a sale, if there are no residual proceeds after the
repayment of the related debt, will be allocated 99% to the limited partners
and 1% to the general partners.
NOTE 7--SUBSEQUENT EVENT
Distributions of cash from operations relating to the quarter ended December
31, 1996 were made on January 30, 1997 in the aggregate amount of $1,153,964
($13.86 per limited partnership unit).
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AT DECEMBER 31, 1996
INITIAL COST TO
THE PARTNERSHIP
-------------------------------------------------------------
LEASE COMM.
& OTHER OTHER NET
BUILDINGS & CAPITAL ASSETS
DESCRIPTION LAND IMPROVEMENTS COSTS (LIABILITIES)
- --------------------------------------------------------- ------------- ------------- ------------ -----------------
Brea, CA.
-Puente Street (See Note A) $ 3,985,498 $ 8,542,701 $1,273,000 $( 619)
Las Vegas, NV.
-Palms Business Center III and IV (See Note A) 2,195,482 7,783,981 115,493 213,309
Fontana, CA.
-Dahlia (See Note A) 1,367,969 5,471,878 227,625 345,703
Salinas, CA.
-Santa Rita Plaza (See Note A) 0 8,056,722 196,574 1,963,363
Germantown, MD
-Waters Landing II (See Note A) 2,091,742 0 0 0
Phoeniz, AZ
-University Business Park (See Note A) 1,834,355 3,724,297 86,200 (14,271)
------------- ------------- ------------ -----------------
Total Wholly-Owned Property $ 11,475,046 $ 33,579,579 $1,898,892 $ 2,507,485
------------- ------------- ------------ -----------------
------------- ------------- ------------ -----------------
15.25% interest in Columbia Gateway Corporate Park
Partnership. Develop and operate office/R & D bldgs. in
Columbia, MD.
See Note B
------------- ------------- ------------ -----------------
Total Joint Ventures
------------- ------------- ------------ -----------------
------------- ------------- ------------ -----------------
continued
COSTS SUBSEQUENT
TO ACQUISITION
-----------------------------------------------------------
WRITE OFF WRITE OFF OF
BUILDINGS OF LEASE COMMISSIONS
AND TENANT & OTHER WRITE DOWN
DESCRIPTION IMPROVEMENTS IMPROVEMENTS CAP. COSTS OF PROPERTY
- ------------------------------------------------------- ------------- ----------- ------------------ -----------
Brea, CA.
-Puente Street (See Note A) $ 776,766 $(409,228) $( 1,273,000) $(2,900,000)
Las Vegas, NV.
-Palms Business Center III and IV (See Note A) 65,573 0 0 0
Fontana, CA.
- Dahlia (See Note A) 0 0 0 0
Salinas, CA.
-Santa Rita Plaza (See Note A) 305,868 0 0 0
Germantown, MD
-Waters Landing II (See Note A) 0 0 0 (600,000)
Phoeniz, AZ
-University Business Park (See Note A) 64,697 0 0 0
------------- ----------- ------------------ -----------
Total Wholly-Owned Property $ 1,212,904 $(409,228) $( 1,273,000) $(3,500,000)
------------- ----------- ------------------ -----------
------------- ----------- ------------------ -----------
15.25% interest in Columbia Gateway Corporate Park
Partnership. Develop and operate office/R & D bldgs.
in Columbia, MD. See Note B
------------- ----------- ------------------ -----------
Total Joint Ventures
------------- ----------- ------------------ -----------
------------- ----------- ------------------ -----------
CHANGE IN
OTHER NET
ASSETS
DESCRIPTION (LIABILITIES)
- ------------------------------------------------------- -----------------
Brea, CA.
-Puente Street (See Note A) $ 1,098,806
Las Vegas, NV.
-Palms Business Center III and IV (See Note A) (61,483)
Fontana, CA.
- Dahlia (See Note A) (325,197)
Salinas, CA.
-Santa Rita Plaza (See Note A) 23,827
Germantown, MD
-Waters Landing II (See Note A) 0
Phoeniz, AZ
-University Business Park (See Note A) (52,124)
-----------------
Total Wholly-Owned Property $ 683,829
-----------------
-----------------
15.25% interest in Columbia Gateway Corporate Park
Partnership. Develop and operate office/R & D bldgs.
in Columbia, MD.
See Note B
-----------------
Total Joint Ventures
-----------------
continued
BALANCE AT END OF YEAR
--------------------------------------------------------------------
ACCUMULATED
BUILDINGS & OTHER DEPRECIATION DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS NET ASSETS TOTAL AND AMORTIZATION CONSTRUCTION ACQUIRED
- -------------------------- ---------- ------------- ----------- ---------- ---------------- ------------ -----------
Brea, CA.
-Puente Street (See Note
A) $3,985,498 $ 6,010,239 $1,098,187 $11,093,924 $( 1,516,146) 1989 6/1/91
Las Vegas, NV.
-Palms Business Center
III and IV (See Note A) 2,195,482 7,849,554 267,319 10,312,355 (741,484) Lease-up 3/7/88
Fontana, CA.
- Dahlia (See Note A) 1,367,969 5,471,878 248,131 7,087,978 (301,593) 1990 9/21/87
Salinas, CA.
-Santa Rita Plaza (See
Note A) 0 8,362,590 2,183,764 10,546,354 (604,074) 1990 2/1/89
Germantown, MD
-Waters Landing II (See To be
Note A) 1,491,742 0 0 1,491,742 0 Constructed 5/26/87
Phoeniz, AZ
-University Business
Park (See Note A) 1,834,354 3,788,995 19,805 5,643,154 (183,456) 1991 9/30/87
---------- ------------- ----------- ---------- ---------------- ------------ -----------
Total Wholly-Owned
Property $10,875,045 $31,483,256 $3,817,206 $46,175,507 $( 3,346,753)
---------- ------------- ----------- ---------- ---------------- ------------ -----------
---------- ------------- ----------- ---------- ---------------- ------------ -----------
15.25% interest in
Columbia Gateway
Corporate Park
Partnership. Develop and
operate office/R & D
bldgs. in Columbia, MD. $4,722,223 N/A Phase I-1990 12/21/87
Phase II-Under
Construction
---------- ------------- ----------- ---------- ---------------- ------------ -----------
Total Joint Ventures $4,722,223
---------- ------------- ----------- ---------- ---------------- ------------ -----------
---------- ------------- ----------- ---------- ---------------- ------------ -----------
DEPRECIABLE
DESCRIPTION LIFE
- -------------------------- -----------
Brea, CA.
-Puente Street (See Note
A) 30 Years
Las Vegas, NV.
-Palms Business Center
III and IV (See Note A) 25 Years
Fontana, CA. - Dahlia (See
Note A) 25 Years
Salinas, CA.
-Santa Rita Plaza (See
Note A) 25 Years
Germantown, MD
-Waters Landing II (See
Note A) Land
Phoeniz, AZ
-University Business
Park (See Note A) 30 Years
-----------
Total Wholly-Owned
Property
-----------
-----------
15.25% interest in
Columbia Gateway
Corporate Park
Partnership. Develop and
operate office/R & D
bldgs. in Columbia, MD. 50 Years
-----------
Total Joint Ventures
-----------
-----------
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
NOTE A TO SCHEDULE III
ADDITIONS
BALANCE CONVERSION TO TO ADDITIONS
AS OF WHOLLY- OWNED LEASE TO WRITE DOWN
DESCRIPTION 12/31/95 PROPERTY COMMISSIONS PROPERTY OF PROPERTY
- --------------------------------------------------- ---------- ------------- ----------- ----------- ---------------
Brea, CA.--Puente Street........................... $10,992,487 $ 0 $ 58,848 $ 0 $ 0
Las Vegas, NV.--Palms Business Center III and IV... 10,213,358 0 18,908 16,908 0
Fontana, CA.--Dahlia............................... 7,376,162 0 1,860 0 0
Salinas, CA.--Santa Rita Plaza..................... 10,421,259 0 27,868 253,368 0
Germantown, MD--Waters Landing II.................. 0 1,491,742 0 0 0
Phoenix, AZ--University Business Park.............. 0 5,630,581 19,141 64,697 0
----------- ------------- ----------- --------- -----------
Total Wholly-Owned Property........................ $39,003,266 $ 7,122,323 $ 126,625 $ 334,973 $ 0
----------- ------------- ----------- --------- -----------
----------- ------------- ----------- --------- -----------
CHANGE IN
PROPERTY WORKING
DESCRIPTION CAPITAL
- --------------------------------------------------- ----------------
Brea, CA.--Puente Street........................... $ 42,589
Las Vegas, NV.--Palms Business Center III and IV... 63,181
Fontana, CA.--Dahlia............................... (290,044)
Salinas, CA.--Santa Rita Plaza..................... (156,141)
Germantown, MD--Waters Landing II.................. 0
Phoenix, AZ--University Business Park.............. (71,265)
----------
Total Wholly-Owned Property........................ ($ 411,680)
----------
----------
12/31/95 1996
BALANCE ACCUMULATED DEPRECIATION
AS OF DEPRECIATION AND AND AMORTIZATION
DESCRIPTION 12/31/96 AMORTIZATION EXPENSE
- ------------------------------------------------------------------- ---------- ---------------- ----------------
Brea, CA.--Puente Street........................................... $11,093,924 $1,267,937 ($ 248,209)
Las Vegas, NV.--Palms Business Center III and IV................... 10,312,355 395,448 (346,036)
Fontana, CA.--Dahlia............................................... 7,087,978 42,908 (258,685)
Salinas, CA.--Santa Rita Plaza..................................... 10,546,354 238,920 (365,154)
Germantown, MD--Waters Landing II.................................. 1,491,742 0 0
Phoenix, AZ--University Business Park.............................. 5,643,154 0 (183,456)
------------ ------------- ------------------
Total Wholly-Owned Property........................................ $46,175,507 $1,945,213 ($ 1,401,540)
------------ ------------- ------------------
------------ ------------- ------------------
12/31/96
ACCUMULATED
DEPRECIATION AND
DESCRIPTION AMORTIZATION
- ------------------------------------------------------------------- ----------------
Brea, CA.--Puente Street........................................... $1,516,146
Las Vegas, NV.--Palms Business Center III and IV................... $ 741,484
Fontana, CA.--Dahlia............................................... $ 301,593
Salinas, CA.--Santa Rita Plaza..................................... $ 604,074
Germantown, MD--Waters Landing II.................................. $ 0
Phoenix, AZ--University Business Park.............................. $ 183,456
----------
Total Wholly-Owned Property........................................ $3,346,753
----------
----------
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
NOTE B TO SCHEDULE III
CASH CASH
INVESTMENTS DISTRIBUTED
BALANCE IN EQUITY IN 1996 AMORTIZATION FROM CONVERSION TO
PERCENT OF AS OF JOINT INCOME/ OF DEFERRED JOINT WRITE- DOWN WHOLLY-OWNED
DESSCRIPTION OWNERSHIP 12/31/95 VENTURES (LOSS) ACQUISITION FEES VENTURE OF PROPERTY PROPERTY
- ------------------ ---------- ---------- ------------- ----------- ----------------- ------------ ----------- -------------
Waters Landing II
(2)............. 60% $1,491,742 $ 0 $ 0 $ 0 $ 0 $ 0 ($1,491,742)
University
Business Park
(1)............. 60% 5,630,581 0 0 0 0 0 (5,630,581)
Columbia Gateway
Corporate Park.. 15.25% 4,699,450 0 360,214 (1,941) (335,500) 0 0
---------- ------------- ----------- ----------------- ------------ ----------- -------------
$11,821,773 $ 0 $ 360,214 ($ 1,941) ($ 335,500) $ 0 ($7,122,323)
---------- ------------- ----------- ----------------- ------------ ----------- -------------
---------- ------------- ----------- ----------------- ------------ ----------- -------------
BALANCE
AS OF
DESSCRIPTION 12/31/96
- ------------------ ---------
Waters Landing II
(2)............. $ 0
University
Business Park
(1)............. 0
Columbia Gateway
Corporate Park.. 4,722,223
---------
$4,722,223
---------
---------
(1) Effective January 1, 1996 converted to wholly-owned property.
(2) Effective April 1, 1996 converted to wholly-owned property.
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ----------- ----------------------------------------------------------------------------------------------- ---------------
10A. Joint Venture Agreement of Waters Landing Partners Two, dated as of May 26, 1987 between the
Partnership and Waters Landing Two-Oxford Limited Partnership, a Maryland limited partnership
("Oxford"). *
10B. Promissory Note dated May 26, 1987 from Oxford to the Partnership in the original principal
amount of $3,121,600. *
10C. Joint Venture Interest Pledge and Security Agreement, dated as of May 26, 1987, between the
Partnership and Oxford. *
10D. Joint Venture Agreement of Graham Road Joint Venture, dated as of June 30, 1987, between the
Partnership and Connell-Scott Ventures V. *
10E. General Partnership Agreement of IBG Dahlia Associates, dated as of September 21, 1987, between
the Partnership and 20 Dahlia Partnership. *
10F. General Partnership Agreement of Hewson University Associates, dated as of September 30, 1987,
between Hewson Properties, Inc. and the Partnership. *
10G. General Partnership Agreement of Gateway 51 Partnership, dated as of December 21, 1987, among
M.O.R. Gateway 51 Associates Limited Partnership, the Partnership and New England Life Pension
Properties IV; A Real Estate Limited Partnership. *
10H. Ground Lease dated January 23, 1988 between Nielson Properties, LTD., a California limited
partnership ("Landlord"), and Rodde McNellis/Salinas, a California general partnership
("Tenant"). *
10I. Leasehold Indenture dated February 12, 1988 by Rodde McNellis/Salinas, Borrower, to Santa Clara
Land Title Company, Trustee, for New England Pension Properties V, A Real Estate Limited
Partnership ("NEPP V"), Beneficiary. *
- ------------------------
* Previously filed and incorporated herein by reference.
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ----------- ----------------------------------------------------------------------------------------------- ---------------
10J. Promissory Note dated February 12, 1988 in the principal amount of $1,800,000 by Rodde
McNellis/Salinas to NEPP V. *
10K. Pledge of Note and Security Agreement dated as of February 12, 1988 by and between Rodde
McNellis/Salinas and NEPP V. *
10L. R/M Salinas Predevelopment Agreement dated February 12, 1988 by and between NEPP V and Rodde
McNellis/Salinas. *
10M. Joint Venture Agreement of Rancho Road Associates II dated as of March 7, 1988 by and between
NEPP V and Commerce Centre Partners. *
10N. Pledge and Security Agreement dated as of March 7, 1988 by and between Commerce Centre Partners
and NEPP V. *
10O. General Partnership Agreement of Muller Brea Associates dated as of April 29, 1988 between Tar
Partners and the Registrant. *
10P. Lakewood Associates General Partnership Agreement dated August, 1988 between EW Lakewood
Limited Partnership, Copley Pension Properties VI; A Real Estate Limited Partnership and
Registrant. *
10Q. First Amendment to Rancho Road Associates II Joint Venture Agreement dated as of May 31, 1988
by and between the Registrant and Commerce Centre Partners. *
10R. First Amendment to Pledge and Security Agreement dated as of May 31, 1988 by and between the
Registrant and Commerce Centre Partners. *
10S. Joint Venture Agreement of R/M Salinas Venture dated as of February 1, 1989 by and between New
England Pension Properties V; A Real Estate Limited Partnership and Rodde McNellis/Salinas. *
- ------------------------
* Previously filed and incorporated herein by reference.
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- --------- ----------------------------------------------------------------------------------------------- ---------------
10T. First Amendment to Joint Venture Agreement of R/M Salinas Venture dated as of February 1, 1989
by and between New England Pension Properties V; A Real Estate Limited Partnership and Rodde
McNellis/Salinas. *
10U. Amended and Restated General Partnership Agreement of Gateway 51 Partnership dated as of April
20, 1989 between M.O.R. Gateway 51 Associates Limited Partnership, New England Life Pension
Properties IV; a Real Estate Limited Partnership and New England Pension Properties V; a Real
Estate Limited Partnership. *
10V. Second Amendment to Pledge and Security Agreement dated as of June 20, 1990 by and between
Commerce Centre Partners, a California general partnership and Registrant. *
10W. Second Amendment to Rancho Road Associates II Joint Venture Agreement dated as of June 20, 1990
by and between Registrant and Commerce Centre Partners. *
10X. Second Amendment to Joint Venture Agreement of R/M Salinas Venture dated as of July 20, 1990 by
and between the Registrant and Rodde McNellis/ Salinas. *
10Y. Agreement for Dissolution, Distribution and Winding-up of Muller Brea Associates dated May 31,
1991 by and between TAR Partners, a California partnership, and the Registrant. *
10Z. Property Management Agreement effective as of May 31, 1991 by and between TAR Partners, a
California general partnership, and the Registrant. *
10AA. Asset Contribution Agreement by and among Evans Withycombe Residential, Inc., a Maryland
Corporation, and Evans Withycombe Residential, L.P., a Delaware limited partnership, as
Purchasers and Lakewood Associates, an Arizona limited Partnership composed of Registrant,
Copley Pension Properties VI and EW Lakewood L.P., as Sellers dated June 9, 1994. *
10BB. Purchase and Sale Agreement between Graham Road Joint Venture and Prentiss Properties Atlanta
Industrial Properties, L.P., dated June 17, 1994. *
- ------------------------
* Previously filed and incorporated herein by reference.
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- --------- ----------------------------------------------------------------------------------------------- ---------------
10CC. $1,750,000 note secured by Deed of Trust between the Partnership, as Lender, and Nielsen
Properties, Ltd, as Borrower dated August 1, 1995. *
10DD. Third Amendment to Agreement of Lease dated August 1, 1995 by and between Nielsen Properties,
Ltd., a California limited partnership, R/M Salinas Venture, a California general partnership,
and R/M Salinas, L.P., a California limited partnership. *
10EE. R/M Salinas L.P. Limited Partnership Agreement dated August 1, 1995 between Rodde
McNellis/Salinas, a California general partnership and Registrant. *
10FF. Limited Partnership Agreement of IBG Dahlia Associates dated September 1, 1995 between
Registrant and 20 Dahlia Partnership, a California limited partnership. *
- ------------------------
* Previously filed and incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NEW ENGLAND PENSION PROPERTIES V;
A REAL ESTATE LIMITED PARTNERSHIP
Date: March 31, 1997 By: /s/ Joseph W. O'Connor
----------------------------
Joseph W. O'Connor
President of the
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ----------------
President, Principal
Executive Officer and
Director of the
/s/ Joseph W. O'Connor Managing General Partner March 31, 1997
- -----------------------------
Joseph W. O'Connor
Principal Financial and
Accounting Officer of the
/s/ Daniel C. Mackowiak Managing General Partner March 31, 1997
- -----------------------------
Daniel C. Mackowiak
Director of the
/s/ Daniel J. Coughlin Managing General Partner March 31, 1997
- -----------------------------
Daniel J. Coughlin
Director of the
/s/ James J. Finnegan Managing General Partner March 31, 1997
- -----------------------------
James J. Finnegan